Daulat Rao Scindia and Raghoji Bhonsle took the Treaty of Bassein as an insult to the national honour of the Marathas. Soon the forces of both the chieftains were united and they crossed the river Narmada. Wellesley seized this opportunity and declared war in August 1803.
Arthur Wellesley captured Ahmadnagar in August 1803 and defeated the combined forces of Scindia and Bhonsle at Assaye near Aurangabad.
Subsequently, Arthur Wellesley carried the war into Bhonsle's territory and completely defeated the Maratha forces on the plains of Argaon. As a result, the Treaty of Deogaon was signed between Bhonsle and Wellesley. The former signed the subsidiary treaty which forced him to give up the province of Cuttack in Orissa.
The campaign of British commander Lord Lake against the forces of Scindia was rather dramatic. Lake triumphantly entered the historic city of Delhi and took Shah Alam, the Mughal Emperor under British protection. Lake was quick in consolidating his conquests. By negotiating with the Raja of Bharatpur, he occupied Agra. Sadly this military engagement proved to be a battle of great slaughter in which thousands of Maratha soldiers perished. Scindia signed a subsidiary treaty with the British. It is known as the of Surji -Arjungaon.
During the war against Bhonsle and Scindia, Holkar remained aloof because he was Scindia's enemy. However, when Wellesley offered an alliance, Holkar made extreme demands. This made Wellesley to declare war against Holkar. The campaign against Holkar was well-organised but the English generals for the first time committed blunders. Holkar remained unsubdued.
An unscrupulous annexationist and an advocate of forward policy, Wellesley was one of the greatest empire-builders that England had ever produced. Wellesley converted the British Empire in India to the British Empire of India. The establishment of British paramountcy in India was his supreme task. He located the weak spots of the Indian powers and applied his political technique (namely Subsidiary Alliance). By the annexation of Karnatak and Tanjore he paved the way for the formation of the Madras Presidency. He rightly deserves to be called the maker of the erstwhile Madras Presidency and the creator of the Province of Agra. In this manner a great part of the Indian subcontinent was brought under Company protection. 'He turned the East India Company from a trading corporation into an imperial power'.